Minimum Wage Raise Too Little, Too Late

by Holly Sklar / July 23rd, 2008

Minimum wage workers have been stuck in a losing game of “Mother May I” with the federal government. Workers step forward when the government says yes to raising the minimum wage. Workers step backward when the cost of living increases, but the minimum wage doesn’t.

Until 1968, minimum wage workers took frequent and big enough steps forward to make overall progress. Since 1968, when the minimum wage reached its peak buying power, workers have taken many steps backward for every step forward.

The July 24 minimum wage raise is so little, so late that workers will still make less than they did in 1997, adjusting for the increased cost of living, and way less than in 1968.

The decade between the federal minimum wage increase to $5.15 an hour on Sept. 1, 1997, and the July 24, 2007 increase to $5.85 was the longest period in history without a raise.

Gas prices rose from $1.23 to $2.97 a gallon in the same period. Now it’s over $4.

The new $6.55 minimum wage is lower than the 1997 minimum wage, which is worth $6.88 in 2008 dollars, and way lower than the inflation-adjusted $9.86 minimum wage of 1968. For full-time workers that translates into $20,509 a year at the 1968 rate, compared with just $13,624 at the hourly rate of $6.55.

The minimum wage does not provide a minimally adequate living standard — and it still won’t when the last scheduled raise to $7.25 takes place next July.

Workers are constantly choosing what to go without — “heat or eat,” child care or health care.

Higher education does not protect you from falling wages. The inflation-adjusted wages of recent college graduates were lower in 2007 than they were in 2001.

There’s been a massive shift of income from the bottom and middle to the top. The richest 1 percent of Americans has increased their share of the nation’s income to a higher level than any year since 1928, the eve of the Great Depression.

Our modern robber baron age features people like Countrywide Financial CEO Angelo Mozilo. He pocketed $103 million last year as the subprime mortgage ponzi scheme morphed into the worst financial crisis since the Depression.

Minimum wage workers don’t put raises into predatory lending, commodity speculation or offshore tax havens. They recycle their needed raises back into local businesses and the economy through increased spending.

Eight of the “SurePayroll Top Ten States for Small Businesses” in 2008 have had state minimum wages above the federal level. They include Washington, California and Oregon, three of the four states with the highest minimums.

Let Justice Roll, a national faith, community, labor and business coalition, which I advise, is calling for a minimum wage of $10 in 2010.

$10 in 2010 will bring the minimum wage closer to the value it had in 1968, a year when the unemployment rate was a low 3.6 percent.

It will bring the minimum wage closer to the “minimum standard of living necessary for health, efficiency and general well-being of workers” promised by the Fair Labor Standards Act establishing the minimum wage 70 years ago.

Britain’s restaurants are creaming off millions of pounds of customers’ tips to boost their profits, an investigation by The Independent has found.

A series of legal ploys are being used by major companies including Strada, PizzaExpress and Carluccio’s to take a slice of the £4bn a year that diners leave for low-paid staff in tips.

Today, The Independent launches a campaign to improve the treatment of the country’s 231,845 waiters and waitresses – and ensure that customers know where their money is going when they leave a tip.

Most restaurant customers believe staff receive the tips or service charge as a reward for good service. But our investigation has discovered that tips left by diners are being regularly used to pay basic wages, or meet costs.